Plan B for the budget battle

10/19/15

We suggested last week that Republicans could use their majority status in Congress to begin forcing completion and passage of the 12 appropriation bills that were supposed to be enacted before the fiscal year began on October 1. There has been no forward progress on any of these bills since Democrats began filibustering them in the Senate. Abolition of the filibuster would probably be necessary to break the impasse, and if the president chose to veto the appropriation bills then a government shutdown might result. There is no easy way to resolve this budget battle, 10/12/15.

Reader feedback (posted at the end of the entry) was mixed, ranging from “agreed” to ideological rigidity could blow the GOP’s chances in the 2016 elections. Although a return to systematic budget procedures is sorely needed, such a demand might not resonate with the general public. Ho hum, the government is badly run, what else is new? And in any case, it would be folly to risk another shutdown (the one in 2013 didn’t end well for Republicans) without a well-defined strategy embraced by the GOP leaders in both houses of Congress – which might be tough to arrange, particularly during a confusing leadership transition in the House.

So perhaps the better part of valor for conservatives would be to forego a high stakes showdown and engage in a series of skirmishes for more limited objectives. With that thought in mind, here’s an update on some areas in which progress may be possible or losses can be minimized.

I. The filibuster – Senate Majority Leader Mitch McConnell is said to be unwilling to “go nuclear” and abolish the filibuster, but he is surely aware of growing anger about the almost automatic use of this venerable rule to block consideration of legislation that the president et al. don’t favor.

Accordingly, a review of the filibuster rule is to be undertaken with the objective of amending it at the start of next year. The recommendation may be to stop requiring 60% votes on motions to proceed (take up a bill) but continue to require them to cut off debate. Senate Republicans open door to weakening the filibuster, Alexander Bolton, The Hill, 10/12/15.

Such a change wouldn’t end the possibility for abuse, but it would make delaying tactics more obvious and enable the public to decide whether they were appropriate under the circumstances. Seems like a step in the right direction.

2. Planned Parenthood –After undercover videos purported to show Planned Parenthood’s involvement in the harvesting and sale of body parts from aborted fetuses, representatives of the nonprofit organization stoutly denied that it had done anything that was illegal or even morally dubious. Critics were dismissed as anti-abortion zealots who had presented selectively edited videos to make their case.

Last week, however, a policy change was announced. PP will continue to make the body parts available for research purposes, but it will no longer seek reimbursement for the costs involved in providing them. Planned Parenthood changes fetal-tissue reimbursement policies, David Crary, Washington Times, 10/13/15.

Some critics remain far from satisfied, but the charge of illegally selling fetal body parts for profit has seemingly been laid to rest – a development for which conservatives can and should take credit. A case could still be made for eliminating federal grants to Planned Parenthood, but it doesn’t seem essential to force the issue right now.

3. Export-Import Bank – As previously reported, the charter of the Export-Import Bank expired on June 30. The bank is currently barred from making new commitments, and barring a reprieve its activities will gradually be phased out. DC update: three big battles in September, 8/31/15 (part C).

Termination of the EIB is opposed by big business beneficiaries, e.g., Boeing and GE, and has been decried by politicians on both sides of the aisle – including the president. It’s time for Congress to pass a responsible budget, weekly address, 8/22/15.

For the first time ever, Congress failed to reauthorize the Export-Import Bank. That left thousands of business owners and their employees at a serious disadvantage compared to their competitors overseas. That’s not good for jobs. It's not good for our economy. When it returns from recess, reauthorizing the bank ought to be a top agenda for members of Congress.

Extraordinary efforts are being made to reinstate the EIB. Thus, at the end of July, a provision to this effect was illogically inserted in a Senate bill (HR 22) to provide more federal funding for roads, bridges, and other infrastructure. Fixing the Highway Trust Fund, 8/3/15.

The latest short-term funding fix for the HTF will expire on October 29, creating apparent urgency to take up HR 22. But a House committee is about to start marking up its own highway, etc. bill, and another short-term fix for the HTF (leaving the EIB in limbo) appears likely. House advances multi-year highway bill next week, Susan Ferrechio, Washington Examiner, 10/14/15.

In other action, House Democrats and several dozen Republicans joined to pass a discharge petition (rarely used procedural device) that will force a House vote (scheduled for October 26) on a standalone bill to reinstate the EIB. Presumably this bill has the votes to pass in the House, but it may not be taken up expeditiously in the Senate. Export-Import Bank will come to new House vote, Carl Hulse, New York Times, 10/9/15.

Americans for Prosperity coordinated a 10/7/15 letter opposing the discharge petition, which was signed by 40 free market organizations (including SAFE). Conservatives lost that round, but this expression of anti-EIB sentiment will hopefully be remembered as matters progress. Remember, all that’s required to win is to prevent an affirmative change to the current status quo.

4. Debt limit – Having previously urged that the debt limit be raised by November 5, Treasury Secretary Jacob Lew has moved up the day of reckoning to November 3. Lew to Boehner: US runs out of cash in 19 days, Niels Lesniewsky, rollcall.com, 10/15/15.

Operating the United States government with no borrowing authority, and with only the cash on hand on a given day, would be profoundly irresponsible. As I wrote previously, we anticipate that a remaining cash balance of less than $30 billion would be depleted quickly. In fact, we do not foresee any reasonable scenario in which it would last for an extended period of time. The government makes approximately 80 million payments a month, including Social Security and veteran benefits, military salaries, Medicare reimbursements, and many others. In the absence of congressional action, Treasury would be unable to satisfy all of these obligations for the first time in the history of the United States. If Republicans can extract concessions for raising the debt limit, good for them, but our sense is that the other side has a strong position and won’t yield an inch. Witness what happened in February 2014. The GOP’s debt ceiling surrender, Manu Raju & Jake Sherman, politico.com, 2/11/14.

Speaker John Boehner et al. are currently laying the groundwork for a debt limit increase by November 3, and it doesn’t sound as if there will be any quid pro quo. Boehner’s bucket list: Find a Speaker, solve fiscal train wreck, Susan Ferrechio, Washington Examiner, 10/16/15.

Boehner has long said he won't let the government close due to lack of funding, signaling that he'd green light a debt ceiling increase. With a budget deal nowhere in sight yet, he is thought to be prepared to move a standalone debt ceiling bill, which would pass with a mix of Democratic and Republican votes.

Instead of making the outcome seem like another conservative defeat, Republicans might do well to “make a virtue of necessity” and propose abolition of the debt limit. An explanation for such a policy change might be along the following lines.

We’ve concluded that trying to control excessive spending with the debt limit is akin to locking the proverbial barn door after the cow has been stolen. The goal should be to balance the budget and keep it that way, not by raising taxes but by eliminating the expenditure of taxpayer money on government programs and activities that aren’t justifiable on a realistic cost/benefit basis.

5. Defense policy bill – We previously reported (relying on a Fox News release) that Congress had passed a defense policy bill (HR 1735), which was sent to the president for signature on October 7 and would probably be vetoed due to its linkage with the $612 billion defense appropriation bill. Since HR 1735 wasn’t an appropriation bill, however, we concluded that “the filibuster firewall against appropriation bills remains in full force and effect.” There is no easy way to resolve this budget battle, 10/12/15.

Given an absence of news about subsequent developments, we checked the status of HR 1735 on the Thomas legislative site. Both the House and Senate did indeed approve the conference committee version of HR 1735, but the bill wasn’t sent to the president. Why? The final House vote was followed by agreement to a motion to reconsider, which put the bill into a state of suspended animation. That’s presumably where matters will stand until such time as it is deemed appropriate to proceed, e.g., after a budget deal has been negotiated.

6. Bargaining chips – Rightly or wrongly, we have the impression that Republicans have been less effective in negotiating concessions for desired votes than the other side. And to achieve better results, they need to raise the level of their game. Several points follow that might prove relevant in the upcoming budget negotiations.

#What did Republicans get for supporting the Trade Promotion Authority bill that would give the president a chance to gain congressional approval for pending trade agreements? But for their assistance, this bill would have been handily defeated, yet to our knowledge they received nothing in return. Free trade yes, TPP maybe, 5/18/15.

Negotiations for a huge 12-nation trade deal have now been completed, and the resulting agreement will be presented to Congress for an up or down vote within a few months. We are referring, of course, to the 12-nation TransPacific Partnership, which was announced in early October. Deal reached on Pacific Rim trade pact in boost for Obama economic agenda, David Nakamura, Washington Post, 10/5/15.

In his 10/10/15 weekly address, the president took lots of credit for the TPP. Indeed, there was only one reference to the role played by legislators: “I look forward to working with both parties in Congress to approve this deal – and grow our economy for decades to come.”

SAFE favors free trade in principle and endorsed the TPA bill on that basis, but we also urged that any resulting trade agreements be reviewed carefully. And while it would be premature to reach conclusions until all the details have been put on the table, some troublesome aspects of the TPP have been noted already, e.g., arguably inadequate protection for intellectual property (a key US concern in international trade). The Pacific trade stakes, Wall Street Journal, 10/6/15.

This is not to suggest that Republicans should support the TPP in return for the administration’s agreement to soft-pedal its demands for more spending in the budget negotiations. Decisions about the TPP should be made based on the merits after all the details have been made available, but if people are seeking your support it never hurts to ask what they have done for you lately.

#Turning to energy policy, one might think Republicans could seek some Democratic concessions that would contribute to boosting the economy without adverse effects on the environment.

Perhaps the president could see his way clear, for example, to finally approve the Keystone pipeline. This may be the most carefully studied infrastructure proposal that would augment government revenues rather than requiring subsidies in human history. An update on the Keystone pipeline, 2/25/13.

Another possible request would be for nonobjection to HR 702, a bill recently passed by the House that would permit the export of US-produced crude oil, i.e., let free markets work. Ending oil export ban should be easy decision, 10/5/15.

So far, the administration has been unreceptive, although the reasons cited seem flimsy at best – perhaps boiling down to “not invented here.”

•White House statement: "Legislation to remove crude export restrictions is not needed at this time. Rather, Congress should be focusing its efforts on supporting our transition to a low-carbon economy. It could do this through a variety of measures, including ending the billions of dollars a year in federal subsidies provided to oil companies and instead investing in wind, solar, energy efficiency, and other clean technologies to meet America’s energy needs." Obama to veto exports of oil, demands “low-carbon economy,” godfatherpolitics.com, 10/8/15.

•”By threatening to veto a bill greenlighting oil exports, President Obama last week sent a powerful message to Congress and to the American public: The administration is unlikely to sign off on any measures expanding fossil fuel production and sales, even if those measures carry economic benefits for the U.S. and national security benefits for key allies around the world.” Obama stands firm against oil export ban despite potential economic benefits, Ben Wolfgang, Washington Times, 10/11/15.

7. Taxes – Revenue neutral tax reform could be a good thing, with a wholesale elimination of tax preferences to be offset by lower tax rates. We’ve repeatedly advocated this idea. Five don’t do’s for tax reform, 4/20/15.

There simply isn’t enough time left to tackle real tax reform this year, however, and many of the presidential candidates are touting their own tax plans (which vary widely). If new taxes or tax rate increases were enacted in the near term, moreover, they would predictably be used as a pretext for spending increases instead of being applied to reduce the deficit. Reverse engineering the president’s budget, 2/9/15.

Accordingly, we recommend that the budget talks be focused on spending limits only.

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If the foregoing points are kept in mind, we think the principals should be able to negotiate a reasonable budget deal pretty quickly. After all, why should it take until December 11 (expiration date of the current CR) to divide up the spending differences involved?

Work on the 12 appropriation bills should then resume and be completed as soon as reasonably possible, with the understanding that henceforth the appropriation process will be completed before the fiscal year begins.